The notice of adverse claim relied upon by Registrar to justify its refusal to register the requested transfer of plaintiff's stock consists of three letters dated November 2, 1964, January 21, 1965, and March 23, 1965. The first letter was by Scharps as president of Plastics, to Registrar, in which the latter was told that under no circumstances was plaintiff's stock to be transferred without Scharps' approval. The second letter, also from Scharps as president of Plastics to Registrar, reiterated the instructions given in the November 2, 1964 letter and concluded that "under no circumstances [was Registrar] to effectuate any transfer of shares of stock registered in the name of [plaintiff], notwithstanding the fact that a 'no action' letter may be issued with respect thereto by the United States Securities and Exchange Commission." The third letter was written by Scharps' attorney to Registrar, enclosing an affidavit signed by Scharps as president of Plastics, in which prior instructions were repeated that Registrar was not to transfer plaintiff's shares "until directed to do so by the President of Plastics." In not one of these letters does Scharps lay any claim to plaintiff's stock. Nothing contained in said letters would impose upon a transfer agent a duty to make inquiry concerning an adverse claim, but even if it be assumed that a duty to make inquiry did exist, it is clear from the record in this case that no investigation was made by Registrar in connection with any adverse claim asserted by Scharps, and that it refused to register the transfer requested by plaintiff only because it was directed not to do so by Scharps. The reliance of Plastics on the Scharps adverse claim will be treated later in this opinion.

Both Registrar and Plastics refer to a possible violation of the Securities Act of 1933.

Registrar's position is that the stock submitted to it for transfer had not been registered under the Securities Act of 1933, and that this raised a question as to whether a transfer could be made on the basis of the "no action" letter furnished by plaintiff. Plastics, while conceding that its defense to this action is based primarily upon the existence of the alleged adverse claim to the stock made by Scharps, says it is also obliged to take reasonable steps to satisfy itself that it is not participating in a criminal act in permitting a transfer of shares of stock not registered under the Securities Act of 1933, and which bear a legend that the shares are subject to an investment representation. This Court is satisfied that the refusal of both Registrar and Plastics to make the requested transfer of plaintiff's stock was based, not on any fear of criminal sanctions under the Securities Act of 1933, but on orders from Scharps that the requested transfer was not to be made.

Service of process on Plastics, at first improperly attempted, was eventually made by registered mail as directed in this Court's order of March 24, 1965, and in conformity with Rule 4(d)(7) of the Federal Rules of Civil Procedure, and the New Jersey Rules of Civil Practice, R.R. 4:4-4(d).

Insisting that plaintiff must rely solely upon diversity of citizenship and amount in controversy in order to vest jurisdiction in this Court, Plastics asserts it does not have the required minimal contacts with New Jersey so as to permit an exercise of jurisdiction over its person.

An affidavit filed on Plastics' behalf by its secretary, Charles L. Burkhart, states that Plastics is not doing business in New Jersey, and that it has no offices, solicits no sales, has no telephone listings, and does no advertising in this State. The business of Plastics, according to the affidavit is the manufacture, sale and distribution of laminated plastic sheets and related items, and it is alleged that this business activity is carried on in states other than New Jersey. The affidavit goes on to say that Plastics never contemplated that the appointment of a transfer agent in New Jersey would subject it to service of process in the jurisdiction where such transfer agent conducted its business activities; that Plastics was always of the understanding that it could control ultimate policy decisions which might have to be made in connection with the transfer of its stock; and that Plastics never considered its relationship with Registrar to be that of master and servant, but rather, that it looked upon Registrar as an independent entrepreneur.

Plastics also contends that the mere presence of its transfer agent, Registrar, in New Jersey, does not establish those minimal contacts with the state that would justify the exercise of in personam jurisdiction by this Court.

This Court does not decide that the mere presence in this state of Registrar, without more, is sufficient to subject Plastics to personal jurisdiction. But it does hold that Plastics did have such contacts with New Jersey in relation to activities giving rise to this lawsuit as to make it amendable to a judgment in personam, and that the maintenance of this action in this District does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. State of Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945); Hoagland v. Springer, 75 N.J. Super. 560, 183 A.2d 678 (App. Div. 1962).

Plastics' argument for a dismissal of the action for failure to join Scharps as an indispensable party is bottomed on Scharps' claim that he is entitled to a recision of the sale of Plastics stock he made to plaintiff. As previously noted, the Florida action in which Scharps sought such relief has been dismissed. Scharps has made no claim in this action to the stock in question. The only thing before this Court that makes any mention of Scharps' claim is the statement in the Burkhart affidavit, previously mentioned, that Plastics has received notice from Scharps that he claimed ownership of the stock, and that Scharps had instituted an action in the federal court in Florida to rescind the transfer of the shares he had made to plaintiff. This vague language is meaningless. No details are given; no facts are stated in support of the alleged claim; all this Court is told, without any specificity, is that Scharps has notified his corporation that he claimed ownership of plaintiff's stock. Equally indefinite and vague are the previously mentioned letters sent by Scharps to Registrar.

This Court is not being called upon, in this action, to decide the dispute arising out of Scharps' alleged adverse claim to the stock. That is a matter between Scharps and plaintiff. The question to be decided here is whether Plastics and Registrar acted properly in refusing to register a transfer of plaintiff's stock because of an adverse claim thereto. All parties necessary for a resolution of this question are before this Court, and Scharps is not an indispensable party to an adjudication of this issue.

The remaining question to be decided is whether, on the present record, plaintiff is entitled to a mandatory injunction, by way of summary judgment, to have his stock transferred on the books of Plastics. It is contended that there are disputed questions of material facts in this case that preclude the granting of a summary judgment. These facts are said to relate to the propriety of Plastics' refusal to permit a transfer of plaintiff's stock because of the assertion of an adverse claim thereto. It becomes necessary, therefore, to examine the law dealing with the right of a corporation to refuse a transfer of stock where conflicting claims to the same stock are made by different persons.

Since jurisdiction in this case is based upon diversity of citizenship, the law of the forum applies, as well as the local rule of conflicts of law. Alcaro v. Jean Jordeau, 138 F.2d 767 (3 Cir. 1943).

Effective January 1, 1963, New Jersey adopted the Uniform Commercial Code, N.J.S.A. 12A:1-101 et seq. Section 12A: 8-106, dealing with the rights and duties of an issuer with respect to registration of transfer of securities, provides that such rights and duties "are governed by the law (including conflict of laws rules) of the jurisdiction of organization of the issuer." This Court is required, therefore, to look to the law of Florida, and its conflict of laws rules, to ascertain the rights and duties of a corporation to register a transfer of stock in light of an adverse claim.

The Florida cases cited by counsel for the parties, principally Warner v. Florida Bank & Trust Co., 160 F.2d 766 (5 Cir. 1947) and Mixson v. First National Bank, 102 Fla. 468, 136 So. 258 (1931) are not helpful. We are dealing here with the refusal of a Florida corporation to register a transfer of stock made by plaintiff to his nominee, not because of any irregularity concerning that particular transfer, but because of an alleged adverse claim made to that stock by Scharps. Under these circumstances, the "law of the place where the paper is", Direction Der Disconto-Gesellschaft v. U.S. Steel Corporation, 267 U.S. 22, 69 L. Ed. 495, 45 S. Ct. 207 (1925) and Warner v. Florida Bank & Trust Co., supra, has no application.

Florida has not enacted the Uniform Commercial Code. It did adopt the Uniform Stock Transfer Act in 1943. However, as pointed out in 12 Fletcher, Cyclopedia Corporations, 1957 Revised Volume, § 5518, at page 542, the Uniform Stock Transfer Act, unlike the Uniform Commercial Code, does not cover the problems arising out of conflicting claims to stock and the rights and duties of an issuer or transfer agent with respect thereto. The case law of Florida is singularly silent on this point.

Since, in this diversity case, research has not brought to light any controlling Florida authorities on the question here involved, this Court, upon a consideration of such other legal authorities as are deemed pertinent, is obliged to prophesy, on the basis of such authorities, how the Florida courts would decide the issue here if called upon to do so. See Slattery v. Marra Bros., 186 F.2d 134, 139 (2 Cir. 1951). It is this Court's considered judgment, for reasons hereinafter stated, that Florida would grant plaintiff the relief he seeks here.

A respectable body of law that is indicative of the rights and duties of a corporation with respect to registration of transfers of its stock is, of course, the previously mentioned Uniform Commercial Code, which is presently effective in 24 states, and soon to become effective in at least 3 others.

Under the Code, and so far as is pertinent to the facts of this case, an issuer to whom a security is presented for registration is under a duty to register the transfer as requested in the absence of any adverse claim. If there is an adverse claim, the issuer is under a duty to make inquiry concerning such claim if written notification thereof is received at a time and in a manner which affords the issuer an opportunity to act on it prior to the issuance of a new certificate. This duty of inquiry may be discharged by the issuer by any reasonable means, including notification by mail to the adverse claimant that the security has been presented for registration, and that the transfer will be registered, unless within thirty days from the date of mailing the notification, either an appropriate restraining order issues from a court of competent jurisdiction or an indemnity bond is filed with the issuer sufficient in amount to protect the issuer from any loss or damage it may sustain by reason of compliance with the adverse claim. After this duty of inquiry is discharged, it then becomes mandatory under the Code, N.J.S.A. 12A:8-401, for the issuer to register the transfer.

It is to be noted at this point that counsel for Plastics has informed this Court that in connection with the dismissal of the Scharps action in Florida, leave was given to Scharps to file an amended complaint within twenty days from the order of dismissal, which is dated May 18, 1965. The Court is also informed that it is Scharps' intention to file an amended complaint. Be that as it may, the issue before this Court, as previously pointed out, is limited to a determination of plaintiff's right to have a transfer of his stock registered on the books of Plastics. Whether or not Scharps can establish his claim to that stock as against plaintiff in some other proceeding is another matter, with which this Court is not presently concerned.

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